Insurers based outside of the United States of America should be aware that notice of a lawsuit against them in the United States may come through informal and unexpected means. Notice of a lawsuit may not be received through formal channels or by the insurer directly. Instead, notice sent to a general email address, to a third party or even via social media is possible.
Like other civil proceedings in the federal courts of the United States, disputes against foreign insurers must begin with proper notice. Rule 4 of the Federal Rules of Civil Procedure, treaty obligations and foreign laws govern service of process. The primary function of Rule 4 is to provide the mechanism for giving notice of the lawsuit to the defendant and indicating the court’s assertion of jurisdiction over the lawsuit. This is usually accomplished by service of a summons and complaint on the defendant pursuant to the procedures set out in Rule 4.
The default method of service on a foreign company under Rule 4 is any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents. Service under the Hague Convention typically takes three to six months but can take over a year in certain jurisdictions (e.g., Mexico and China). A plaintiff, and often the court, will not want to wait this long for the lawsuit to proceed.
Rule 4 thus permits service by other means as the court allows, so long as such means are not prohibited by international agreement. Plaintiffs can request substituted service within and outside the United States by a variety of mechanisms. Such mechanisms can include service via a third party like the insurer’s U.S. parent company or affiliate, the insurer’s legal counsel or the insurer’s third-party claims agent. They can also include service via alternative methods such as email, postal channels or even social media.
Substituted service often delays notice of the lawsuit finding its way to the proper individuals at the insurer. The import of such delay is that, under the Federal Rules of Civil Procedure, a defendant must serve its answer within twenty-one days after being served with the summons and complaint. Substituted service can compress this timeline greatly.
It would be wise for insurers to advise their employees who do not typically receive notice of lawsuits (e.g., custodians of general email addresses, social media team) and their third-party vendors of the importance of immediately forwarding such notices to the appropriate individuals for proper handling.
